Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Setback for LogoVAZ At Aluminum Works

In the latest episode in the battle for influence over the aluminum industry, creditors of the Novokuznetsk Aluminum Factory have voted to bring in external management, which will sideline control by the company's new majority shareholder, LogoVAZ.

During a meeting Friday, 81 percent of creditors of the Novokuznetsk plant located in Western Siberia said they wanted external managers to run the company for one year.

The company, Russia's No. 5 aluminum producer, also announced Monday that it will resume exports suspended in late January.

LogoVAZ, a financial-industrial group founded by controversial tycoon Boris Berezovsky, snapped up a controlling interest in Novokuznetsk last month. It was part of a series of moves in which LogoVAZ and oil major Sibneft, controlled by Berezovsky and tycoon Roman Abramovich, were said to have gained control over 60 percent of the nation's aluminum industry.

In last Friday's decision, Novokuznetsk's creditors also recommended that Sergei Chernyshov, the company's acting external manager since late January when a court announced bankruptcy proceedings could start against the company, be approved in his post.

Chernyshov is said to be allied with Sibirsky Aluminum president Oleg Deripaska, a Berezovsky rival. Sibirsky Aluminum owns Russia's third-largest smelter, Sayansk.

Nikolai Petrov, a political analyst with the Carnegie Center, said it is difficult to assess the significance of the Novokuznetsk creditors' decision. "This type of conflict is often unpredictable," he said. "The important thing will be the final result."

Mikhail Seleznyov, a metals analyst at United Financial Group, said the Novokuznetsk creditors' decision probably does not pose a long-term threat to Berezovsky's dominance. "But the move definitely deals him a blow."

The decision will be examined by the Kemerovo arbitration court, which will review the shareholders' recommendation next Monday.

Under the law, a court appoints an external manager to run a company if bankruptcy proceedings are started against it until the enterprise is either brought back from bankruptcy or sold off.

Novokuznetsk's total debts to 29 creditors now stand at 3.73 billion rubles ($131 million).

A strange twist in the voting Friday was the key role played by three companies with previously unknown connections to Novokuznetsk. The aluminum company ran up 1.6 billion rubles to Energopromservice, Azial and Flyer, apparently three weeks ahead of the creditors' meeting Friday, Vedomosti reported.

In a telephone interview, Novokuznetsk spokeswoman Galina Kutlyayeva would not clarify how the company's new creditors appeared on the scene. "It's just a question of numbers," she said of the creditors' move. "Over 80 percent voted for external management and it's their decision."

Novokuznetsk's previous largest creditor was electricity utility Kuzbassenergo, which initiated bankruptcy proceedings against the company in January.

Voting against external management was the MIKOM financial-industrial group, Novokuznetsk's majority shareholder until LogoVAZ bought its controlling stake.

Last month, Deripaska called for an investigation into the sales of shares in aluminum plants to Sibneft affiliates, saying the matter fell under antitrust legislation.

But Anti-Monopoly Minister Ilya Yuzhanov on Thursday gave the deals the go-ahead.

Acting President Vladimir Putin has so far stayed clear from public involvement in this year's aluminum deals. But analysts have said a go-ahead from the Anti-Monopoly Ministry might have signified Putin was rewarding Berezovsky for his role in creating Unity, the pro-government State Duma faction.